Pranab Mukherjee justifies price rise

NEW DELHI: Finance Minister Pranab Mukherjee on Wednesday justified the current spurt in prices of essential commodities, asserting that "in a growing economy with high growth-rates, there'll be inflationary pressures."

The Leader of the House, while replying to the day-long debate on price-rise in the Lok Sabha this afternoon, added at the same time that that UPA regime had taken care to factor in the concerns of the common man by providing rights to people with legal entitlements.

Mr Mukherjee's remark was trashed later by Leader of the Opposition Sushma Swaraj. While winding up the discussion, she heaped scorn on the government's claim that inflation was linked to growth-rate. "The government is in a dilemma. It cannot decide whether to act on inflation or not. The Prime Minister's failure is more abject on this count. At various international fora, he talks about the inflationary trends, but cites it as an indication of growth. The international community pats his back,'' she said.

The Opposition leader said that the economy was growing only for a certain section of people. "Millionaires have become billionaires. But the number of poor has also grown simultaneously, as pointed out by various committees,''she said while expressing her disappointment with the finance minister's response. The House later adopted a resolution calling upon the government "to take further action to contain the adverse impact of inflationary pressure on the common man.''

In his hour-long reply, which was marred by several interruptions, the Leader of the House listed out the measures taken by the government to contain prices. "We have subsidised the supply of essential commodities through a revamped PDS to the vulnerable sections. At the same time, steps are being taken to raise agricultural productivity. The Green Revolution is being extended to the eastern parts of the country,'' Mr Mukherjee told the House.

The finance minister said that the RBI has unveiled several steps to mop up excess liquidity in the economy. "Too much money is chasing too few goods, thereby fuelling inflation,'' he said.

Mr Mukherjee, while agreeing with the Opposition's contention that petrol prices had to be rationalised, emphasised the importance of rolling out the GST regime. "An entire spectrum of service taxes, excise duties and VAT will be brought under a constitutional mechanism. Before that, all the states will have to be taken on board. It's a major tax reform, and will have to be supported by all,'' he said.

The finance minister, in his speech, in fact, took pains to emphasise that any war on containing prices will not bear any result unless the states and the Centre coordinated their efforts. "Today, a majority of the states are being governed by the Opposition parties. The supply of essential commodities is to be maintained by the states. Action on hoarding and dehoarding will have to be done by the states. ESMA is with them There has to be collective responsibility,'' Mr Mukherjee said.

The finance minister also spoke about the need to revamp the PDS system. "This too will have to be done collectively by the Centre and the states,'' he maintained.